How and why does the IRS garnish a taxpayers wages?
Why does the IRS garnish a taxpayer’s wages?
There are a several reasons why the IRS may garnish a taxpayer’s wages, but it is clearly to settle outstanding tax obligations of the taxpayer that have been unpaid or are being blatantly ignored. Other reasons include a failure by the taxpayer to pay for his child support obligations. Generally speaking, wages can be garnished directly from the individual taxpayer’s paycheck. This is usually done by contacting the taxpayer’s employer and demanding a levy on taxpayer’s wages.
What are amounts that can be garnished from an individual taxpayer’s wages?
Usually every state has its own rules regarding the amount that can be garnished from a taxpayer’s wages. The federal government has established a maximum rate of 25% that can be garnished from an individual’s taxpayer’s income. But it is worth noting that some states only allow for a lower limit.
How does the IRS go about garnishing a taxpayer’s wages?
The IRS will initially issue 3a Notice and Demand for Payment. If this notice is ignored, a Final Notice will be issued 30 days prior to the garnishment of wages. If there is no action taken by the taxpayer at this time, the taxpayer may find that his wages will then be garnished.
Once a taxpayer’s wages have been officially garnished by the IRS, the employer has no choice but to take the settlement from the paycheck. One exception would be an independent contractor whose income is reported on Form 1099-Misc. In this case, the employer is entirely released from this obligation.
It is also worth noting that the IRS also possesses the right to levy, or freeze, bank accounts in efforts to settle debts as an alternative to wage garnishment. This is usually the course of action especially if the taxpayer is not employed and is a self-employed business person.